Marcus v. AXA Advisors, LLC
2015 U.S. Dist. LEXIS 43016
E.D.N.Y2015Background
- Plaintiffs sued AXA claiming misclassification of two groups in New York: (1) pre-contract associates (who signed 12th- or 20th-edition pre-employment agreements) and (2) 20th-edition employee-agents, alleging violations of NYLL minimum wage and overtime provisions. Plaintiffs sought liability-only class certification under Fed. R. Civ. P. 23.
- AXA operates multiple branch and satellite offices in New York; practices and supervision allegedly varied by office and by stage (unlicensed vs. licensed pre-contract associate).
- Pre-contract period: unlicensed associates studied for required licenses and (by AXA policy) could not make sales; licensed pre-contract associates were required to earn production credits (typically minimum 3,000) and could solicit business and be paid commissions.
- 20th-edition agents were paid on commission or salary+commission, performed sales as primary duty, attended trainings/meetings, and sometimes worked largely from the office; AXA treated them as "outside sales" exempt employees.
- The court analyzed Rule 23(a) commonality, typicality, adequacy, and Rule 23(b)(3) predominance against the backdrop of the applicable legal standards for (a) independent contractor status under New York law and (b) the federal and New York "outside salesperson" exemptions.
- Court denied class certification in full: (1) certified class could not be established for unlicensed pre-contract associates or for 20th-edition agents due to lack of commonality; (2) licensed pre-contract associates satisfied commonality and predominance, but the sole proposed class representative (Marcus) was not typical, so certification was denied.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether pre-contract associates can be certified as a class (misclassification as independent contractors) | AXA uniformly labeled pre-contract associates as independent contractors and required prospecting and attendance at meetings, so common misclassification exists | AXA contends practices differed across offices and between unlicensed vs. licensed pre-contract associates; no uniform control sufficient for class determination | No class for unlicensed pre-contract associates (lack of commonality). Licensed pre-contract associates satisfy commonality and predominance but class denied because representative not typical |
| Whether 20th-edition agents can be certified as a class (misclassification as outside salespersons) | 20th-edition agents worked many hours in-office and AXA failed to ensure sales occurred away from employer’s place of business, so exemption is inapplicable classwide | AXA argues sales occurred in varied locations, some away from office, and federal/N.Y. law allow in-office work incidental to outside sales; substantial variation requires individualized inquiries | Denied: insufficient commonality because individualized fact inquiries (no common proof that agents did not "customarily and regularly" perform outside sales) |
| Proper interpretation of the federal and NY outside-sales exemptions (location/time thresholds) | Plaintiffs argued NY exemption requires "predominantly" (arguably >50% outside) and that 29 C.F.R. §541.502 should be read narrowly to exclude many in-office or neutral-location sales | Defendants urged federal regulation is not so limited and NY law incorporates FLSA exemptions; no >50% time requirement; incidental in-office work can be exempt | Court adopts broader reading: 29 C.F.R. §541.502 is not limited to customers’ homes/businesses; NY law incorporates FLSA exemptions (no 50% threshold) |
| Whether class representative and counsel satisfy typicality/adequacy for licensed pre-contract class | Plaintiffs: Marcus (and counsel) can represent licensed pre-contract associates; he signed pre-employment agreement and alleges same injury | AXA: Marcus only worked briefly, never became licensed, lacks knowledge of other offices, so not typical | Representative insufficiently typical (Marcus never reached licensed phase); counsel adequate but typicality failure defeats certification for that class |
Key Cases Cited
- Marisol A. v. Giuliani, 126 F.3d 372 (2d Cir. 1997) (Rule 23 prerequisites and class certification standards)
- Teamsters Local 445 Freight Div. Pension Fund v. Bombardier Inc., 546 F.3d 196 (2d Cir. 2008) (plaintiff bears preponderance burden to show Rule 23 requirements)
- Wal-Mart Stores, Inc. v. Dukes, 131 S. Ct. 2541 (U.S. 2011) (commonality requires common answers apt to drive litigation)
- Amgen Inc. v. Connecticut Retirement Plans and Trust Funds, 133 S. Ct. 1184 (U.S. 2013) (limits on merits inquiries at certification stage)
- Roach v. T.L. Cannon Corp., 778 F.3d 401 (2d Cir. 2015) (Rule 23(a) and (b)(3) analysis; predominance and typicality discussion)
- Gold v. New York Life Ins. Co., 730 F.3d 137 (2d Cir. 2013) (New York overtime law and incorporation of FLSA exemptions)